Toyota Manufactoring Case

Executive Summary

The production of the new Camry model has introduced new challenges in the Toyota’s Georgetown Plan such as higher labour costs, lost production due to below than projected utilization rates, growing number of inventory in the line, less output per hour, and problems to meet sales agreements at distributions channels. Even though the problem has been attributed to the seat, the management does not know where the source is. Given that at looking to meet the short-term demand production targets the management has deviated from its TPS philosophy, Toyota has lost the trace of the problem and now has the challenge to address it in order to revert this trend. After a throughout analysis, we found out the following aspects could have had a different degree of impact in today’s outcome. The seat types were increased from 12 to 84 with a very short period of accommodation time for the supplier. A higher number of Andon Pulls were found in the second shift. Part of the seat quality problems have also been found in months preceding the new launch. As a resulted we concluded that Management should eliminate the recent deviations from the TPS system and enforce its application thought extensive coaching in order to identify the source of the problem. Several actions should be taken at three levels (Assembling, overflow, and KFS). Due to the reports provided by different areas of the plant, it is likely that the seat problem has many sources that have been aggregated in the end. The following report outlines the problem statement, a short analysis, a list of the proposed solution and recommendations for the management team.

Problem Statement

There have been several signs of problems throughout the assembling line primarily associated with the seat. The line utilization, which measures the number of cars actually assembled divided by the number of cars that could have been assembled, dropped from 95% to 85%. This has led to a significant increase in overtime costs to offset the shortfall of 45 cars per shift. Also, there has been an increase in the number of cars seated off line in the overflow parking area with defective seats or no seats, directly impacting the sales of the company due to the delays in delivering. The offline cars in the overflow area have remained for three days without being repaired, creating an inventory accumulation. This evidently constitutes a step outside of the TPS (Toyota Production System) based on the JIT philosophy in the plant. Furthermore, the assembling team has moved away from the principle of jidoka (make any production problem instantly self-evident and stop producing whenever problems were detected). In this case, the line has not been stopped when a defective seat or a mismatch is found. Unlike jidoka and going back to the old production philosophy, the